New Rules on Lawyer's Responsibilities, Proxy Disc

The Securities and Exchange Commission voted January 23 that

lawyers must inform companies’ top executives, and even members of their

boards, of securities violations at the firm. However, the SEC’s hotly

contested “noisy withdrawal provision” is “still a live wire,” says John

Heine, an SEC spokesperson. The noisy withdrawal provision, which lawyers

have opposed, would require lawyers to snitch on corporate clients by

telling the SEC of a securities infraction at the firm, and then resign from

advising that firm if it failed to heed the lawyer’s warnings.

The SEC extended the comment period on the noisy withdrawal provision for

60 days, and proposed an alternative rule that would require a corporation,

not a lawyer, to report a lawyer’s resignation to the SEC. “Notice to the

public [of a lawyer's withdrawal] would come by way of the issuer [company]

filing an 8-K form” with the SEC, Heine says. The alternative proposal is

also open for a 60-day comment period.

Gene Cauley, a partner with the law firm Cauley Geller Bowman Coates &

Redman in Little Rock, Arkansas, says the SEC is being “cautious and

deliberate” by extending the comment period on the noisy withdrawal